WASHINGTON (Reuters) - The United States will not meet
Congress's mandate to produce more ethanol from waste products
over the next 15 years, resulting in an overall shortfall in
ethanol production requirements contained in a new energy law,
a government forecaster said on Tuesday.

The new energy law requires the United States to produce 36
billion gallons of biofuels a year by 2022 to help stretch
gasoline supplies and reduce oil imports.

But only 32.5 billion gallons of the renewable fuels
standard (RFS) will be met by the target date, said Guy Caruso,
who heads the U.S. Energy Information Administration.

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The shortfall will come from a smaller volume of ethanol
made from cellulosic sources such as wood chips, switchgrass
and other agricultural and forest waste than the law envisions,
Caruso told the Senate Energy Committee.

As result, he said the government will have to issue
waivers on the mandate to ethanol producers in the years ahead.

Most U.S. ethanol is made from corn. Many experts believe
the increased demand for ethanol production is pushing up
prices for grains and thus for the food consumers buy.

"While the situation is very uncertain at this early date,
our current view is that available quantities of cellulosic
biofuels prior to 2022 will be insufficient to meet the new RFS
targets," said Caruso.

He said the EIA assumes the current U.S. tariff on ethanol
imports will be allowed to expire in January 2009, resulting in
"strong growth" in foreign ethanol supplies coming into the
U.S. market after 2010.

Caruso appeared at the hearing to discuss the EIA's revised
long-term energy forecast that now reflects the impact of the
energy law, which was passed by Congress last December..

Separately, higher vehicle fuel efficiency requirements
under the new law will shave about 2.5 million barrels a day
off the U.S. petroleum demand that was projected by 2030 before
the law took effect, Caruso said.

U.S. consumption of liquid fuels, including both oil and
renewable liquids, now increases from about 21 million barrels
a day this year to 22.8 million barrels a day in 2030, led by
transportation fuels that will rise from 68 percent of demand
to 73 percent, according to the EIA.

Oil prices, which this week hit a record of almost $104 a
barrel, are projected to gradually fall through the middle of
the next decade and then slowly increase under the EIA's
long-term reference case to $70 a barrel in constant 2006
dollars by 2030, or about $113 a barrel unadjusted for
inflation.

Caruso said under the agency's worse-case scenario, oil
could hit $185 a barrel in nominal dollars in 2030.

The Energy Department's current policy of adding oil to the
U.S. Strategic Petroleum Reserve could add about $2 to the
price for a barrel of oil and four or five cents to a gallon of
gasoline, when the reserve's fill rate averages about 100,000
barrels a day, according to Caruso.

The department is now delivering about 70,000 barrels of
oil a day to the emergency stockpile, but that fill rate could
rise to 125,000 barrels per day this summer.

While retail gasoline prices will continue to rise this
spring as record crude oil costs are passed on to consumers at
the pump, Caruso said he does not think the national average
will climb to $4 a gallon.

Caruso said there is no one thing the government can do in
the short term to lower gasoline or heating oil prices, except
to encourage Americans to cut back on their fuel use and become
more fuel efficient in their daily lives.